England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
LEEDS DISTRICT REGISTRY
IN THE MATTER OF THE E A SCOTT 1991 CHILDREN'S SETTLEMENT No 1

		The Court House Oxford Row Leeds LS1 3BG
		23 August 2012

Judge Behrens:

1 Introduction

1. This is an unfortunate dispute between two brothers Andrew Scott ("Andrew") and Martin Scott ("Martin"). It concerns a trust created in 1991 by their mother – Elizabeth Scott. Andrew and Martin are currently the sole trustees of the trust. Together with Simon Jackson QC ("Simon") they are the principal beneficiaries under the trust though there are other discretionary beneficiaries.
2. When created in 1991 the trust assets comprised a farm of some 60 acres and a nursing home. However distributions have been made with the result that it currently comprises some 17 acres of agricultural land at Beckwithshaw near Harrogate. The land is currently let and produces a modest income. It is, however, believed that at some time in the future the land may have some development potential and may thus become significantly more valuable.
3. Day to day administration of the trust has since 2006 carried out by Andrew. Regrettably Andrew and Martin have fallen out. In this application Andrew seeks the removal of Martin as a trustee and his replacement by Simon. Martin has counterclaimed for the removal of Andrew and his replacement by Simon. Martin also has a claim for the conversion of a digger which is not material to the trust dispute and for breach of a land agreement made in late 2006.

2 The Facts

4. Before considering the allegations made by each side it is necessary to summarise the history.

2.1 Background

5. Martin was born in August 1959. He qualified as a solicitor in 1985. He is currently the partner at Walker Morris in charge of the Construction and Engineering Department.
6. Andrew was born in August 1964. He is a merchant naval officer/2^nd engineer and now spends much of his life at sea.
7. Unfortunately their father died tragically in 1964 leaving their mother - Elizabeth Scott – to run two businesses – one in Bradford and the other in Harrogate. During this time she met and formed a relationship with Simon who was 20 years younger than her. Simon subsequently qualified as a barrister and is now a QC practising primarily from Leeds. [As I indicated to the parties prior to commencing the case Simon is known to me personally. However the was no objection to my hearing the case. In any event Simon is not a party to the proceedings and did not give evidence and thus my knowledge of him has not influenced my decision]. The relationship between Elizabeth Scott and Simon had ended by 1995 when he married.

2.2 The Trust

8. The Settlement is dated 4^th November 1991. Elizabeth Scott is defined as the Settlor. Elizabeth Scott and her brother Joseph Leslie were the original trustees.
9. The Principal Beneficiaries under the trust were Andrew, Martin and Simon but the Beneficiaries were defined to include their children, spouses and remoter issue.
10. Under clause 5 the trustees had a discretionary power to appoint the capital and income of the trust amongst any one or more of the beneficiaries subject to the written consent of Elizabeth Scott during her life.
11. The substantive trusts are contained in clause 6. The income and capital are to be held in trust for the Principal Beneficiaries in equal shares. The income of each principal beneficiary is to be paid to him for life. After his death the income and capital of his share are held for such of his children as attain the age of 21 within the Trust period.
12. There are a number of administrative provisions but it is not necessary to refer to them in detail.
13. For a period of about two years between April 1993 and August 1995 Simon was excluded as a beneficiary pursuant to a power reserved to Elizabeth Scott.

2.3 The Trust Property

14. The original trust property was defined as £10. However within a short period of time there was added to the trust the farmland and barns at Beechfield Farm Beckwithshaw. The farmhouse at Beechfield Farm where Elizabeth Scott lived was not included in the trust.
15. Middlesmoor, the nursing home in Harrogate, was also transferred into the trust. Whilst it was owned by the trust it yielded an income of about £25,000 per annum which was distributed equally amongst the principal beneficiaries.
16. In or about 1998 Middlesmoor was sold and approximately £150,000 was distributed equally amongst the principal beneficiaries.
17. Between about 2000 and 2001 Andrew carried out substantial construction/conversion works to the Barn. There are factual issues between Andrew and Martin as to the discussions which took place over ownership of the Barn and as to who paid for the conversion works. It is not necessary for me to resolve them. It is, however, common ground that in or about August 2001 the Barn was transferred to Andrew.
18. At or about the same time Elizabeth Scott transferred the Farmhouse to Martin. She had, by that time paid for the construction of an annex where she intended to live. It transpired that part of the annex was on Trust Land. Elizabeth Scott continued to live in the Farmhouse until she moved (at Martin's expense) to a flat in Harrogate.
19. Following a meeting that took place in October 2006 further parts of Beechfield Farm were transferred to Andrew and Martin. All that now remains as trust property is some 17 acres of agricultural land near Harrogate. The land is believed to have development potential which, if realised, would greatly increase its value.

2.4 The Trustees

20. Elizabeth Scott and her brother Joseph Leslie were the original trustees. On 3^rd September 1996 Martin was appointed an additional trustee. In October 2003, at a time when relations between Andrew and Martin were particularly bad Joseph Leslie resigned as a trustee. In his letter of resignation he said that he was not being sufficiently consulted. On 5^th January 2005 Elizabeth Scott died leaving Martin as the sole trustee. Andrew was appointed a trustee on 22 June 2005.
21. In the past offers have been made to Simon to become a trustee. He has always refused on the ground that there would be an inevitable conflict of interest.

2.5 Disputes

22. It is neither necessary nor appropriate to set out a full account of the disputes between the beneficiaries. Although there are detailed accounts in the witness statements of Andrew and Martin there are conflicts of evidence between them. It is, however, necessary to summarise the areas of dispute in the light of the issues now before the Court.
23. Between 2000 and 2001 the principal issue between Andrew, Martin and their mother centred on the conversion works being carried out to the Barn and the ownership of the Barn. After the transfer of the Barn and the Farmhouse Andrew was unhappy that his mother had treated him less favourably than Martin as the Barn was less valuable than the Farmhouse.
24. The problems exacerbated in late 2002 when Martin moved into the Farmhouse with his family. There were a number of disputes:

1. Andrew complained about the building of the stables in one of the barns on the Trust Land and later when a concrete helipad was built outside the main barn for the storage of that helicopter in that barn.

2. As will appear below Andrew expressed concern at the management of the trust, its accounts and solvency. In 2001 there had been substantial expenditure on behalf of the trust which had been financed by Martin who was thus a creditor of the trust.

3. Martin alleges that matters deteriorated rapidly in the early part of 2003, with all of his family (including his mother and uncle) being subjected to various degrees of verbal abuse and threats from Andrew, including a threat to break up the concrete base of the helipad and to smash up his helicopter or 'do' him in personally. This escalated in April/May 2003, when Andrew carried out a violent attack on the Farmhouse whilst Martin was at work but his wife was in. As a result of this attack Andrew was arrested and subsequently convicted of criminal damage.

4. Relations between Andrew and Martin had reached such a low ebb by October 2003 that Elizabeth Scott (after discussing the matter with Martin) wrote to Andrew complaining about his behaviour and stating that she had given instructions for the trust land to be sold, for the trust to be wound down on the basis of a distribution to all the beneficiaries including Simon.

5. In February 2004 Andrew's solicitors, Berwins, wrote to Walker Morris complaining that the trust was becoming bankrupt. The letter went on to suggest that Martin should not continue to act as a trustee. After Simon expressed an interest in buying some of the trust land in March 2004 Berwins responded with a threat of proceedings against the trustees and Martin in particular.

6. In April 2004, in an effort to resolve the dispute Martin offered to buy out both Andrew and Simon's interest in the trust. At or about the same time Andrew received advice from his previous Counsel – Bruce Walker. Mr Walker advised strongly against proceeding against the trustees which he said were highly likely to fail. [See paragraph 52]. The negotiations for the purchase of Andrew and Simon's interest broke down.

7. Following the death of Elizabeth Scott in January 2005 relations between Andrew and Martin improved somewhat and there were a number of proposals for the future of the trust including an offer (which Andrew accepted) that he become a trustee. According to Martin the proposals foundered over Simon's interest in the trust including, as Simon alleged, his interest in the Barn which had, of course, been transferred to Andrew.

8. On 18^th October 2006 there was a meeting attended by Andrew, Martin and their respective solicitors at which a settlement was agreed. The terms of the Agreement were recorded in Minutes and an exchange of letters immediately thereafter. In essence part of the land (marked A) be transferred to Andrew and another part (marked B) to Martin. These transfers resolved the boundary disputes between Andrew and Martin and also retained for the Trust some 17 acres of land which was thought to have development potential.

9. Martin has summarised the effect of the agreement in paragraph 96 of his witness statement.

1) That a clear division of land be achieved between Andrew and me, so as to resolve any issue Andrew had with regards to the extension to the Farmhouse, built by my Mother in 1995, being on Trust Land;

2) That one third of the value of the land transferred to Andrew and me be notionally credited to Simon, to be realised on the sale of the land;

3) The remaining Trust Land be retained by the Trust and that Andrew and me be jointly responsible for its upkeep, to the extent that those costs exceed any income generated (it was agreed that any expenditure in excess of £500 be agreed jointly before the cost was incurred);

4) That we both use reasonable endeavours to secure the development of the remaining land;

5) That we both pay in equal shares the ongoing Trust expenses, including maintenance of the land, accountancy fees, tax bills and other costs that may arise; and

6) With regards to the accounts, it was agreed that whilst all past payments made by Simon would be repaid to him, the loan accounts in mine or Andrew's favour would remain outstanding, until such time as the remaining Trust Land be sold (for my part, my concerns at the time were that as the Trust had no money, so to speak, if I insisted on taking out the monies I was due from the Trust then the Trust would become bankrupt).

10. Following the meeting plots A and B were duly transferred to Andrew and Martin. By agreement Andrew took over the day to day administration of the trust.

2.6 The issues

25. A number of issues have arisen which Andrew relies on as breaches of fiduciary duty by Martin. These include:

1) The failure to acknowledge that Andrew, Martin, and Simon were trading in partnership so as to make it impossible for Andrew to file annual accounts.

2) The failure by Martin to provide adequate explanation for his expenditure in 2001/2002.

3) The unilateral withdrawal in 2004 of £7,000 by Martin from the trust.

4) The failure by Martin to provide Andrew with a written estimate of the cost of the boundary survey carried out by Evans Rennie in February 2007.

5) The erection by Martin on his own land of larger stables than Andrew had been led to believe. The use of the stables for commercial purposes. The failure to seek permission for the use (on occasions) of the trust land for equestrian purposes.

26. In his Counterclaim Martin relies on a number of complaints against Andrew.

1) The failure to file the annual accounts for 2008, 2009 and 2010 resulting in penalties.

2) The failure to honour three specific agreements relating to his land agreed following the 2006 settlement.

3) The conversion of a digger owned by Martin.

3 Current hostility between Andrew and Martin.

27. The current state of the relationship between Andrew and Martin was well demonstrated in the documents, by their witness statements and answers they gave in cross-examination. In paragraph 5 of his skeleton argument Mr Newman gave a number of examples of the current hostility shown by Andrew to Martin.
28. As he acknowledged in cross examination he is bitter about the fact that Martin received the farmhouse whereas he only received the Barn. In answer to questions from Mr Newman he said:

Q. You do not like Martin, do you?

A. As I said, I had a great deal of love for my brother in the early days and I supported my brother, particularly at Panelite, and my state -- my mental state -- now is as a result of the actions that he's taken behind my back.

Q. You feel that he's a "capricious, conniving and greedy and selfish individual"?

A. I certainly do.

29. There are a number of references in the documents where he has used intemperate and wholly inappropriate language. These include letters of 21^st October 2004 and 25^th May 2006 where he described Martin as

"Mr M. Scott is a serial adulterer and has conducted a number of relationships with younger (and clearly vulnerable/drugged) female lawyers in his department…."

"Martin is a capricious, conniving, greedy and selfish individual".

30. When it was suggested that many of the events were a long time ago he replied:

Q. I will ask the question again. These events in 2002 that we've been looking at were ten years ago. What I want to clarify with you is how they affect your relationship with Martin today? Because your application is to remove him as a trustee today, but these events are a long time ago and, indeed, it's the defendant's pleaded case that they are a long time ago, and therefore shouldn't matter.

A. Well, it is certainly a shame I could not challenge him in 2004, which I fully intended to, and instructed to, but it's just -- the nail is in the coffin, all of these situations that I have come to since moving to the barn, it's just nails in the coffin and for me. The final one was, of course, when he basically told me it was a domestic stable situation and I cooperated with absolutely everything –

31. At the beginning of his cross-examination Martin was asked about his relationship with Andrew. I shall not lengthen this judgment with the whole exchange but it included:

MR SELWYN SHARPE: Do you accept that any relationship of trust has broken down between you and Andrew?

A. I accept that Andrew has, over the last ten years, made his position, his entire position, that he will not trust me in any circumstances. So, from my side, I have no particular ... objection to Andrew as a person being a trustee. What I object to is his actions, and lack of actions, having assumed that responsibility, in failing to file accounts.…

Q. In the ideal world, you and your brother would not just get on but trust each other?

A. Well, in a ideal world, my brother would act as a decent human being and not as a thug, but we don't live in an ideal world.

Q. So the relationship of trust has totally gone, has it?

A. No, I think the relationship inter partes, as two brothers, is fractious. But the relationship as trustees of a trust is a whole different matter.

Q. That's what I am talking about.

A. It is a simple relationship which all that is required is for Andrew to do what he said he would do.

. And vice-versa; do you accept that?

A. Well, under the current arrangements that we entered into, I handed over the management of the trust to Andrew so that he could be burdened with the obligations of managing the trust and could leave me alone. Leave me out of it. …

Q. So would it not be better if you were not a trustee at all and you just left it to Andrew and Simon? You are a beneficiary, obviously, with rights as a beneficiary.

A. Well, I don't see that. I was made a trustee by my mother, it's an obligation I took on, I see no need to discard that obligation. The trust is potentially very valuable, it has obligations to a wider category of beneficiaries than just myself, Andrew and Simon, and I regard it as my role to protect their interests for the future.

Q. That role could be undertaken by somebody else. It could be undertaken by Simon, could it not? Do you have a problem with that? Do you have a problem with Simon being a trustee?

A. Well, as I have just said, I do not have a problem per se with Simon being a trustee, but you must understand the dynamic of this. Andrew is a bully and he will get --

Q. He says you're a bully.

A. Well I'm not a bully. But Andrew is. And Simon's track record, when confronted with the sort of behaviour that Andrew will indulge in, is to back off and say, "Well, it's a family matter, you boys are brothers, you sort it out". Now that, I think, could lead to -- if Simon was appointed a trustee, without me, could put him in a very, very difficult position.

32. There was a further exchange towards the end of the cross-examination when discussing the use of the trust land and the Evans Rennie invoice

Q. We've gone over this ground time and time again. But most recently I put it to you that your failure to consult about the Evans Rennie invoice before that work was instructed was another example of a bone of contention arising which you could have avoided. Do you accept that you may have been a cause in that bone of contention in relation to the Evans Rennie invoice and the use of the trust land for horses?

A. No. I don't. If you were dealing with anybody remotely reasonable, these could not possibly be issues of contention between us.

Q. Isn't the lesson from the Evans Rennie dispute that it's better to consult with Andrew?

A. The lesson from the Evans Rennie dispute is that my brother will pick up on anything -- anything at all --which he believes will give him some advantage in terms of this dispute, and Evans Rennie is a classic. I mean, the allegation that I answered originally was not that I failed to consult with him. It's that I had whipped the money. Now it's down to, "Well, you know, a few quid actually in my brother's terms means a fiver, and in my terms it means it's going to cost us"

4 The issues

4.1 The Partnership

33. It will be recalled that the Trust Deed was executed in November 1991. At that time Martin was an Associate Solicitor with Walker Morris. It was plainly contemplated at that time that there would be a partnership between Andrew, Martin and Simon.
34. On 30^th March 1992 Martin sent to Andrew a Partnership Deed to sign. On 21^st April 1992 he sent it to Simon. The covering letter suggests that both he and Andrew had signed it. There is no evidence that it was returned either signed or unsigned by Simon.
35. At or about the same time a bank account with Royal Bank of Scotland ("RBS") was opened. The name of the account was "Beechfield Farm". Cheques were required to be signed by any two of the three authorised signatories - Andrew, Martin, and Simon. The mandate document held by the bank describes each of them as a "Partner".
36. In 1997 RBS asked for a new mandate for the account and new mandate documents were signed by Andrew, Martin and Simon. The bank records still showed them as partners. Some of the early cheque books have the word "Partner" on each cheque. The later cheque books do not. They have the words "Beechfield Farm – 2 signatures required". As will appear below at least one cheque book in 2004 simply had the words "Beechfield Farm Trading Account".
37. Andrew was an engineer at sea, Martin a solicitor and Simon a barrister. All had full time other professions.
38. The Accounts that have been drawn up and duly approved make no mention of a partnership. However the accounts for the year ending 2002 (which are considered in more detail below) debit the current accounts of each of the principal beneficiaries with their share of the loans made by Martin to the trust. This would be consistent with a partnership account rather than a trust account. A beneficiary is not required to contribute to the trust assets.
39. There was a conflict of evidence as to whether Andrew refused to be a partner with Simon. He denied this. He said that Martin proposed animal husbandry but described this as "a lame duck". The solution was to get a tenant farmer.
40. In evidence Andrew accepted that he had been advised by his previous Counsel that there was no partnership. He did not accept that advice and contended that it was impossible to prepare the accounts because Martin will not now acknowledge the Partnership.
41. When Martin gave evidence he attributed the possible partnership to his mother. He pointed out that initially the trust had an income from Middlesmoor and that his mother was not keen on the three boys spending this income on fast cars. The idea was that they would establish a partnership to trade the farm. In other words they would buy stock or equipment or both, and use that to create a trading profit over and above might be achieved by way of pure grazing licences. However each of the boys had other jobs; none were farmers or any real background in farming and it became difficult to agree on a trading use for the farm that was achievable. In the result they simply continued the arrangement that was in place with the farmer.

Conclusion

42. As Mr Newman points out in paragraph 37 of his closing submissions a partnership is defined as the carrying on of a business in common with a view to profit.
43. I accept that a partnership was contemplated in 1992 and that preliminary steps were taken to bring one into existence. This no doubt included the preparation of the Partnership Deed and the setting up of the Partnership Bank Account. Whilst there is evidence that the Partnership Deed was signed by Andrew and Martin there is in fact no evidence it was signed and returned by Simon. If it had been returned to Martin it is more than likely that it would have been stored by Walker Morris and would now be available. Andrew, Martin and Simon have not been treated as partners since 1992.
44. In paragraph 37 of his closing submissions Mr Selwyn Sharpe submits that there is clear evidence that a partnership was created for the day to day running of the farm. I cannot accept that submission. I am not satisfied that that the proposed partnership ever came into existence.
45. I accept the evidence of Martin as to what happened in 1992. As Mr Newman points out the proposed business never happened.
46. I also accept that the current account banking arrangements which were set up when a partnership was contemplated and never changed are consistent with a partnership. They are a factor to be taken into account but are not in my judgment conclusive.
47. It is, to my mind, not without significance that in 1993 Elizabeth Scott exercised her powers under the Trust to exclude Simon from benefit. This would simply not have been possible if there was a partnership between Martin, Andrew and Simon.
48. In my view the advice that Andrew was given by his former Counsel was correct. There was and is no partnership. The accounts that have been drawn up appear to be trust accounts and not partnership accounts. The returns that have been made to the Revenue appear to be on the basis that the income is trust income. Whilst it is true that the 2002 accounts do show Andrew and Simon as debtors this factor has to be seen in the light of letters sent by Mr Root of Berwins to Walker Morris on 12^th August 2003 and 28^th October 2003. The letter of 28^th October 2003 includes the following:

… on further consideration of various accounts we do have a concern about the manner in which they have been drawn up. It seems to us that the accountant has dealt with the various capital accounts as if the three beneficiaries were in partnership. Our view is that this is incorrect and any deficit of income because of the high level of expenses should not be set against the partners' individual 'capital accounts' but should rather be set against the assets in the balance sheet.

49. To my mind Mr Root has made a sound point about the manner of drawing up the accounts. However the reason the point is sound is because, as he clearly asserts, the three beneficiaries were not in partnership. If they had been in partnership the manner in which the accounts were drawn up would have been correct. Thus it was Andrew's case in 2003 that there was no partnership. He has been advised that there is no partnership. His current refusal to file accounts on the basis that there is or might be a partnership is to my mind both unreasonable and irrational.

4.2 Panelite

50. In 1996 Martin was the Chairman of and majority shareholder of Scottsmall Ltd which traded under the name of Panelite. Andrew was an employee of Panelite and a minority shareholder.
51. It is common ground that in November 1996 Panelite suffered from cash flow problems. When he gave evidence Andrew said that it had made a trading loss of about £250,000 in the period up to December 1995.
52. It is also common ground that at about that time Martin asked Andrew to countersign a trust account cheque dated 30 November 1996 for £10,000 so as to provide a temporary loan to Panelite. It is common ground that no loan was ever made. There are, however, differing accounts as to precisely what happened.
53. In his witness statement Andrew suggests that Martin told him that he needed £10,000 to save Panelite. When he refused Martin went berserk screaming and shouting at him. In evidence he suggested that the decision not to countersign the cheque was a commercial decision based on his view of the financial position of Panelite. He said:

… we haven't put in the monthly accounts because Panelite really was actually a past issue for us. This brings it up. But I can guarantee you that this was not -- this was not the situation that Panelite was in and £10,000 -- £10,000 ... Martin had panicked and just run to my house one Saturday after --Sunday afternoon or Sunday morning -- and I had told him things were serious and that's why I refused to sign the cheque. I told him that we were in trouble and he needed to do something and he just didn't do anything for seven months and then the next thing I know he's saying, "Can you sign this cheque?", so -- which I just said, "Well, we're just throwing good money after bad", and I refused --

JUDGE BEHRENS: You refused to sign it on commercial grounds?

A. Purely commercial grounds, as you will see by the monthly accounts.

54. Martin's recollection is contained in paragraphs 117 and 118 of his witness statement. His recollection is that Andrew was only prepared to help if Martin made changes to Panelite including the dismissal of one or both its directors. Martin was not prepared to do this and thus the matter was not pursued.
55. The only contemporaneous document is a letter dated 2^nd December 2006 from Martin to Panelite's then Finance Director - Paul Pritchett which includes:

I have given my brother the Trust cheque book and on it is drawn a cheque in favour of Panelite in the sum of £10,000 by way of loan. Obviously if this money is needed you will have to approach Andrew vis-à-vis the handling over the same, however the situation has been fully explained to him and hopefully therefore you will face no difficulty in this regard.

56. Paul Pritchett's recollection, contained in paragraph 22 of his witness statement is that Panelite did not need the loan and that he never needed to approach Andrew for the cheque. However when I indicated that I doubted whether I would be assisted by Paul Pritchett's evidence he was not called to give evidence.
57. The events of 1996 were, of course, more than 15 years ago. It is hardly surprising that recollections should differ. It is however clear that on any view of the facts Martin consulted Andrew about making a loan to Panelite and that no loan was made. It is difficult to see how any breach of fiduciary duty by Martin was involved. I note that in paragraph 32 of his closing submissions Mr Selwyn Sharpe has abandoned the issue.

4.3 The 2002 Accounts

58. The trust accounts for the years up to 5^th April 2002 showed only modest expenditure by the Trust:

Yr	Income	Expenditure	Profit
1998	23,702	8,774	14,928
1999	2,661	3,224	(563)
2000	3,696	1,665	2,031
2001	3,332	3,232	100

59. This expenditure increased dramatically in the year up to 5^th April 2002. According to Martin there were three main projects that were carried out. The first project was for the repair of the dry stone walls which had been damaged by bullocks introduced by the tenant farmer. The second project – the Towers project – involved the burying of large amounts of stone which had become an eyesore. The final project was the barn project. The core of that project was the conversion of the north east barn into stables for the family. It involved the concreting of the floor, the recladding of the entirety of the stables.
60. According to Martin 90% of the use of the stables was for his family's benefit. Martin did not suggest that there was a detailed discussion with Andrew about the cost of the works but he did suggest that the general cost would have been discussed. Some of the work on the barns was carried out by Andrew and it is not in dispute that Andrew was paid by Martin.
61. The work was paid for by Martin and the majority of it charged to the trust. Work such as the partitioning of the stables was not charged to the trust but the timber that had been incorporated into the barn was.
62. The accounts for the year ending 5^th April 2002 show expenditure of £25,150 against an income of £1,971. They also show that the expenses paid personally by Martin amounted to £24,961. [The accounts went on to debit the net loss to the beneficiaries' current accounts and it was this point that was picked up in Mr Root's letter of 28^th October 2003].
63. On 14^th August 2002 Andrew wrote a letter to Martin In it he said that he understood that the trust accounts would show the trust "lurching towards insolvency".
64. The 2002 draft accounts were received by Andrew in late 2002 or early 2003. In evidence Andrew described the accounts as "a bomb blast". In paragraph 48 of his witness statement Andrew said:

"I felt at the time that Martin was looking to bankrupt the trust and end up with a larger share for himself. I tried to raise these issues with my mother but she simply accused me of being insane and it was clear that she trusted Martin implicitly. I raised many questions about this set of accounts with the trustees, including Martin, but never received proper answers."

65. It has to be remembered that relations between Andrew and Martin reached a low ebb in 2003.
66. On 12^th August 2003 Berwins wrote to Walker Morris a letter which expressed concern about the Trust's income position and asked for a full and detailed breakdown of the sum of £24,961.
67. Martin referred this query to the trust accountants – Baker Tilly – on 4^th September 2003. Baker Tilly replied by stating that they did not hold any records for the 2002 tax year. On 10^th September 2003 Walker Morris replied to Berwins enclosing only the invoices that Martin had been able to locate but making the point that Baker Tilly had at that time mislaid the invoice file.
68. On 8^th October 2003 Berwins responded by pointing out that there were a number of missing invoices which needed to be disclosed and invited Walker Morris to contact them when Baker Tilly were able to locate the file. The letter also objected to an invoice in the sum of £2,347.43 which had been used in the stables.
69. On 15^th October 2003 Walker Morris replied dealing with many of the queries. The letter pointed out that the timber had been used in the fitting out of the stables and the cladding and decking of the barns. As the stables remained a trust asset it was thought appropriate to include the cost of the timber. The letter offered a notional rent of £100 per month for the use of the stables to be defrayed against the cost of the groundsman which was in any event paid for by Martin.
70. On 15^th October 2003 Baker Tilly sent to Martin a copy of the 2002 accounts together with the analysis of the expenditure account. The analysis comprises 5 pages of working papers together with supporting invoices.
71. For reasons that do not matter these documents did not emerge until the second day of the trial and were not analysed until the third day. The analysis shows invoices totalling £27,081 of which £23,501 were said to have been attributed to the trust. There is in fact further doubt in respect of invoices totalling £1,639.65 which were paid by Martin in respect of electrical work carried out by Andrew. Martin was not sure whether these sums were debited to the trust. Andrew said they were not. If these invoices were included there is a difference of £1,460 between the analysis and the figure of £24,961 in the accounts. If they were not included the difference is approximately £3,100.
72. On 20^th October 2003 Walker Morris sent Baker Tilly's letter together with all the enclosures to Berwins, Simon and both the other trustees.
73. Berwins acknowledged receipt on 28^th October 2003. The letter raised no further query about the detailed invoices though the letter did raise the query set out above as to whether the beneficiaries' accounts should have been debited with any part of the shortfall. There was no further correspondence about the detailed invoices.
74. It was suggested to Andrew in cross-examination that the reason the matter was dropped was because Andrew and Berwins were satisfied with the information sent on 20^th October 2003. Andrew did not accept this. He did however say that he received legal advice to the effect that the trustees could justify the expenditure.

The pleaded allegations.

75. The allegations in relation to the 2002 accounts are contained in paragraph 24 of the Particulars of Claim. As originally pleaded the allegation was simply that that no adequate explanation was offered by the then trustees as to why Andrew was in debt or why Martin was in credit. There was a further allegation that the credit figure included a figure for the stables which was being financed by Martin.
76. On the first day of the trial Mr Selwyn Sharpe sought to amend this in three ways. First, he sought to identify the figure wrongly included as being the Harrogate Timber Invoice of £2,347.43. Mr Newman did not object to that amendment and it was allowed. Second, he sought object to the invoice in respect of the Towers project - £7,686.85 on the ground that the work was unnecessary. This was a late amendment involving allegations about work that had been carried out more than 10 years ago. I took the view it would be wrong to allow the amendment which would plainly have involved an adjournment of the trial.
77. Third he sought to allege that Martin had failed to provide supporting invoices in respect of the expenses claimed of £25,150 or his personal expenses of £24,961. Although it is now common ground that the letter of 20^th October 2003 included all of the material supplied by Baker Tilly on 15^th October 2003 neither side produced copies of that material until the second day of the trial. In any event I took the view that this too was a new allegation and ought not to be allowed.

Discussion.

78. Andrew accepted that he was well aware of the work being carried out at the time. Indeed he participated in the conversion works to the barn. In those circumstances he does not and could not complain about the work itself.
79. The allegation with regard to the Harrogate Timber invoice can be dealt with very swiftly. It is, to my mind, a moot point whether that invoice should have been included as an expense of the trust. It is, however, common ground that when the stables were moved in 2009 the trust was credited with £3,000 in respect of the cost of the timber that had been charged to the trust.
80. In relation to the second allegation I was referred to paragraphs 23-22 and 23-28 of the 18^th Edition of Lewin on Trusts where the following passages appear:

It is the bounden duty of a trustee to keep clear and distinct accounts of the property he administers and to be constantly ready with his accounts and he exposes himself to great risks if he omits to do so. The failure to keep proper accounts appears itself to be a breach of trust.

A beneficiary ordinarily has the right to call upon the trustee for accurate information as to the state of the trust … Whilst the trustees must give accurate information, they need not answer never-ending lengthy voluminous enquiries as to the state of the trust beyond what is reasonable having regard to the trustees' time and resources available to respond to such enquiries.

81. This is a case where the trust accounts were professionally drawn up based on vouchers and/or invoices provided to the accountants. There is no complaint that proper vouchers or explanations were not provided for any years other than the year ending 2002.
82. The expenditure in 2002 was substantially higher than in previous years. Thus the request made by Berwins on 12^th August 2003 was a perfectly reasonable request. Martin did not ignore that request. He had provided relevant invoices to Baker Tilly and he referred the request to them. The reply given on 10^th September 2003 was a partial reply in that – at that stage - Baker Tilly had not located the records. However a full response was sent on 20^th October 2003 containing Baker Tilly's analysis and supporting invoices. It is true that the analysis carried out on the third day of the trial does not completely reconcile the invoices with the accounts. However, as noted above, I refused Andrew permission to put the case on that basis. The accounts were compiled more than 11 years ago and there may be many explanations for the small difference identified in the recent attempted reconciliation.
83. What is to my mind of more significance is that no further query was raised by Andrew or Berwins about the figures at the time and, as Andrew said, he was advised against pursuing the matter further. In those circumstances I reject the allegation that the explanation given was inadequate.
84. As already noted I agree with the assertion by Berwins that the accounts should not have shown Andrew or Simon as a debtor to the trust. However that is primarily an accounting matter and I do not regard that as a breach of trust by Martin.

4.4 The cheque book and the cheques for £5,000 and £2,000

85. As a result of his expenditure as recorded in the 2002 accounts Martin was a substantial creditor of the trust. The 2004 accounts show him as being owed £21,839 In September and October 2004 there were two withdrawals in favour of Martin from the trust account in the sums of £5,000 and £2,000 respectively. The effect was to reduce the trust's indebtedness by the £7,000 so that the 2005 accounts, after adjustment for the net income and the expenses paid personally show him as being owed £15,472.
86. Martin was the custodian of the Trust account cheque book and he accepts that he signed the cheques and filled in the cheque stubs. However the cheque book from which the cheques were paid does not expressly state that two signatures are required. This has led Andrew to allege first that Martin procured a cheque book requiring only one signature and second that in breach of mandate these two cheques were not countersigned. In his Particulars of Claim he also alleged that the £7,000 was an unauthorised loan to Martin.
87. No effort has been made to procure the actual cheques. Martin cannot now remember who signed the cheques. It was, however his practice for cheque to be countersigned either by Andrew or Simon. Andrew has provided evidence to suggest he was at sea on the date when the cheques were signed. The cheques were honoured by RBS.
88. In a letter dated 14^th November 2006 Andrew raised a number of queries with Martin over the figures for 2005. In the letter he made the point that there was no explanation for the two withdrawals. On 7^th December 2006 Martin replied by e-mail that the payments were repayment of his loans to be deducted from his loan account.
89. The repayment of the £7,000 is reflected in the 2005 accounts which were prepared by an accountant selected by Andrew. These accounts were submitted to the Revenue by Andrew.
90. In evidence Andrew agreed that he accepted the position at the time. He said this:

Yes, because at the time -- at the time I said: okay you have taken £7,000 out, okay, let's live in peace, live in harmony, that's fine, let's move on, put it behind me. At the time, I put it behind me. I thought that was the expedient thing to do, move forward and live together in peace at the time.

91. The best evidence of the number of signatures on the cheques is the cheques themselves. On the limited evidence before me I am not prepared to hold or infer that Martin obtained a cheque book requiring only one signature or that the relevant cheques had only one signature. In view of the fact that RBS honoured the cheques it seems to me to be more probable that the cheques were signed in accordance with the mandate. Andrew said that he had on a number of occasions since 2006 presented cheques to the bank with only one signature. Apart from the fact that this would appear to involve a breach of trust by Andrew it does not establish that RBS honoured these 2 cheques in 2004 in breach of mandate.
92. I do not accept that there was any breach of fiduciary duty in Martin repaying himself part of the moneys owed to him by the Trust. The repayment was accepted by Andrew at the time.

4.5 The Evans Rennie Invoice

93. It will be recalled that at the meeting on 18^th October 2006 it was agreed that land be transferred to Andrew and Martin. It was also agreed, no doubt to avoid future disputes that there be an accurate boundary survey.
94. It appears that there was a telephone conversation between Walker Morris and Berwins because on 21^st December 2006 Berwins sent Walker Morris an extract from the Land Registry Practice guide to be forwarded to Evans Rennie. Walker Morris replied on 9^th January 2007. At that time the boundary had not been marked out and it was not possible to proceed.
95. On 23^rd January 2007 Martin sent Andrew (who was at sea) and e-mail which included:

We still haven't agreed the delineation of the land. Apart from that and the drawing up of the plans everything is in place. Apparently the plan has to be a GPS survey plan which will cost a few quid. Do you want me get a quote?

96. Andrew replied the following day but did not request a quotation.
97. On 1^st February 2007 Walker Morris wrote to Evans Rennie. The letter instructed Evans Rennie to prepare a Land Registry compliant plan of the boundaries including a plan of the demarcation between plots A and B.
98. On 9^th February 2007 Evans Rennie sent a client care letter to Walker Morris. The letter set out an hourly rate of between £105 and £125, pointed out that two surveyors would be required and anticipated that the survey would take between two and three days.
99. On 27^th February 2007 Walker Morris sent the letter of 9^th February 2007 to Berwins. The covering letter includes:

We understand that Mr Manby will be at Beechfield Farm this week to complete the survey. As soon as the plans are available we will forward them on to Rachel Dunlop. Evans Rennie's fees will be charged to the Trust.

100. Berwins replied on 6^th March 2007. The reply did not comment on the charging rates but did make the point that Andrew was not aware of the appointment of Evans Rennie and that he was at sea.
101. It is not clear when the survey was carried out. It would appear that it was commenced before 27^th February 2007 and completed shortly after. On 7^th March 2007 Evans Rennie sent Walker Morris an invoice for £7,105.81. The invoice makes clear the nature of the work carried out.
102. On 12^th March 2007 Walker Morris sent to Berwins a colour copy of the Evans Rennie drawings in order for Berwins to complete the preparation of the transfers.
103. On 18^th April 2007 there was a meeting at the offices of Berwins. Following the meeting Walker Morris wrote a letter to Berwins setting out a number of matters arising including:

Andrew is to confirm the amount of money held in the trust bank account and the balance required to discharge the Evans Rennie invoice … Martin is to send a cheque payable to the Trust equal to 50% of the balance required to pay this bill.

104. On 15^th May 2007 Martin sent Andrew a copy of the Evans Rennie invoice indicating that he would call in within the next couple of days to sign the cheques.
105. On 20^th May 2007 Andrew sent the cheque for the invoice to Evans Rennie. In the covering letter he said:

…I hope you choke on it. I will never use your services again. Quite frankly you're not worth it.

106. In an earlier letter he had described the survey as "very expensive in which clearly no stone was left unturned".

The pleadings and discussion.

107. The allegations relating to this invoice are contained in paragraph 35 of the Particulars of Claim. As originally pleaded Andrew alleged that the work carried out by Evans Rennie was for the design of the stables. In the light of the correspondence set out above that was plainly a hopeless allegation. The invoice was plainly for the boundary survey.
108. One day before the trial Andrew sought to amend the pleading by alleging that the cost of the Evans Rennie was excessive and that Martin had failed to consult Andrew about the estimated cost before instructing Evans Rennie.
109. I refused the amendment as to the reasonableness of Evans Rennie's charges as that would have required expert evidence and the adjournment of the trial. I allowed the amendment in relation to consultation as it was a matter that could be dealt with by Martin in evidence without difficulty.
110. It is quite clear from the e-mail of 21^st December 2007 that Andrew and/or his advisors knew that Evans Rennie was to be instructed and the survey was to be Land Registry compliant. It is equally clear that Andrew was warned that it would cost "a few quid" but did not respond to Martin's query as to whether to get a quotation. Martin did not get a quotation. Berwins did not request a quotation. The highest the matter can be put is that Walker Morris did not forward to Berwins the client care letter of 9^th February 2007 which gave a rough estimate of what the survey might cost before the work commenced.
111. Whilst Andrew no doubt believes the survey was expensive there is no evidence to suggest that any other surveyor would have carried out a Land Registry compliant survey for less.
112. In paragraph 31 of his closing submissions Mr Selwyn Sharpe submits:

… this was another example of the Defendant simply riding roughshod over the interests of the Trust and the beneficiaries as a whole. Any reasonable trustee would have obtained a proper quote (or range of quotes) for the work and consulted the beneficiaries first before agreeing instructions to the surveyors.

113. I cannot accept that submission. First it appears from the letter of 21^st December 2006 that it had been agreed that Evans Rennie would carry out the survey. Second Martin offered to obtain a formal quotation and, even if he was at sea, Andrew had solicitors acting for him. Berwins did not query the need to instruct Evans Rennie or make any comment on the estimate of fees when they received it. Third, the matter was actually being dealt with by Walker Morris on Martin's behalf. In all the circumstances I am not prepared to hold that the failure by Walker Morris to send the client care letter to Berwins earlier than they did amounted to a breach of trust by Martin.

4.6 The stables

114. As already noted the original stables were constructed in the barn which formed part of the trust land. According to Martin there were 5 stables and 2 tack rooms. During the course of the settlement discussions it was agreed that Martin would move the stables to his own land.
115. Martin commenced the construction of his new stables in late 2008. It is common ground that the stables now constructed by Martin are significantly larger than the stables in the barn. He now has 14 boxes, a horse clamp, a horse walker and an arena. It is not suggested that any of these are now on the trust land and it is thus difficult to see how the stables are relevant to the disputes between the parties.
116. Andrew's complaint about the construction of the stables is threefold. First, that Martin misled him as to their size. Second, that Martin misled him as to their being used for commercial activity. And third that, as a result, Martin used the trust land for the exercise and schooling of Martin's horses.
117. When he gave evidence Andrew was not able to point to any express representation by Martin either as to the size of the stables that he was erecting or as to the use. His most relevant answer was:

A. We had a plan and basically it was taking a building that was there, he would develop the north-east stables and plonking it right there ... So you couldn't run a commercial venture from that building because it was just too small. So implicitly, it was just for his children. I am pretty sure he said just for his children, I'm pretty sure. "My children love horseriding", that was verbally said. Of course I didn't particularly think they did. Fine, have it. If we can all live in peace, have an agreement, it was all fine with me.

118. Martin said that there were no discussions as to his future use of the stables.
119. Martin's use of his own land is not, of course, a trust matter. It is not in dispute that the new stables are built wholly on Martin's land. In the light of this and the evidence as to the discussions set out above it seems to me that Andrew's current objections to the size and use of the stables are unreasonable and unrelated to the trust issues with which this case is primarily concerned.
120. It also renders it unnecessary to set out in detail the somewhat confusing evidence as to the precise users of the stables after 2009. It is sufficient to record that the extent of the user went beyond user by Martin's immediate family. If, as to which I make no finding, some of the user can be categorised as commercial it was only marginally commercial and for a limited time. In his closing oral submissions Mr Selwyn Sharpe described it as "quasi-commercial".
121. Martin's evidence was that he was not aware that the trust land was being used for the exercising of horses. There was some evidence that Andrew complained on one occasion to Pat about her riding on the land. There is no evidence that the incident was repeated. Martin did not know about it at the time. There is equally some limited evidence of some grazing on the trust land. It has to be remembered that both Martin and Andrew are beneficiaries under the trust and it is thus difficult to see what right Andrew has to complain about the user. Martin's evidence was that Andrew was making some use of the land for sporting purposes. In any event I regard the incident as totally irrelevant to any issue about Martin's capability to act as a trustee.

4.7 The filing of the accounts from 2009 to 2011

122. Andrew has refused to file the accounts for the above years. He contends that to satisfy HMRC there should be a proper trust bank account rather than a partnership account and the issues relating to the 2002 accounts, the £7,000 loan and the cost of the stables need to be resolved.
123. For reasons already given Andrew's attitude over the partnership is both unreasonable and irrational. There is no partnership. The fact that the bank account is in name a partnership account does not prevent the filing of accounts with HMRC. Andrew accepted the £7,000 withdrawal in the past and himself filed the accounts which included it. The 2002 accounts have long since been filed.
124. The refusal to file the accounts was and is a breach of trust. In so far as any penalties have been incurred as a result of the late filing of the accounts Andrew should indemnify the trust.

4.8 The Land Agreement

125. As part of the agreement in October 2006 Andrew and Martin entered into an agreement ('the Land Agreement'). It is evidenced by a letter from Walker Morris to Berwins dated 23 October 2006 and a response from Berwins dated 2 November 2006.
126. Under the Land Agreement Andrew agreed to:
127. Construct a dry stone wall between the points C and D (on the plan attached to the letter dated 23 October 2006) within 6 months.
128. Contact BT and arrange for a separate telephone line to The Old Barn to be connected (with the junction box to be installed outside the properties), within 3 months.
129. Arrange for the installation of a separate water supply for the Old Barn, within 4 months.
127. It is common ground that Andrew has not done any of these tasks. When the case was opened Mr Selwyn Sharpe acknowledged that Andrew was in breach of contract and suggested that Andrew be allowed a further 6 months to comply with the contract. In paragraph 65 of his closing submissions Mr Selwyn Sharpe has repeated that suggestion. However, when Andrew gave evidence he agreed that there would be no problem in building the stone wall. He said he could do it himself. However he said that the other two tasks presented difficulty in that they involved a cost of £20,000 which he did not have. He pointed out that he had not been sent any bills by Martin for his use of the water. He also pointed out that sewage from Martin's house discharged into a septic tank on his land and he had not charged Martin for its maintenance.
128. Martin accepted that considerable expense was involved but suggested that Andrew did have sufficient funds to carry out the work. In his closing submissions Mr Newman suggests Martin would prefer damages to be assessed in relation to these items as he does not believe Andrew will obey an order for specific performance.
129. It seems to me that there is a plain breach of contract by Andrew in relation to the Land Agreement. There is no pleaded allegation in relation to the sewage and thus it is irrelevant. I am quite content to order specific performance in relation to the building of the wall. However it seems to me that damages are an adequate remedy in relation to the other two items. In any event I share Martin's concerns that Andrew would not obey an order for specific performance. I will direct an enquiry as to damages if they cannot be agreed.

4.9 The Digger

130. In paragraph 42 of the Counterclaim Martin alleges:

In or around 2009 a Ford digger ('the digger') belonging to the Defendant was delivered to the farm. The Claimant wrongfully (and without the Defendants consent, express or implied) took the digger and refused to return it, whereby the Defendant has suffered loss and damage. The digger has consequently been allowed to rust in one of the fields, its block has cracked and its battery has been removed. The Defendant claims damages accordingly.

131. It is common ground that the digger was old. According to Martin its value was approximately £1,200. Indeed he negotiated a sale at that price which fell through because, so Martin alleges, of the conduct of Andrew or his wife.
132. Andrew accepts that the digger was delivered but alleges that Martin consented to him using it on the farm. Martin denies this and said that the digger was brought to the farm in order that he could use it in the construction of the stables. As a result of Andrew's behaviour he hired a more powerful digger.
133. There is no allegation of negligence against Andrew. The cause of action is pleaded in conversion. Thus the sole issue for me to decide is whether or not Martin consented to Andrew using the digger. On this issue I prefer the evidence of Martin. It follows that I do not think Martin ever consented to Andrew using his digger. It follows that liability in conversion is established.
134. Whilst the digger may have some scrap value I am satisfied it is not reasonable to expect Martin to go to the expense of retrieving the digger from its present position. I accordingly assess damages in the sum of £1,200 together with interest at 6% from the date when the digger was delivered.

5 Removal of Martin and/or Andrew as trustees

5.1 The Law

135. The court has jurisdiction to remove a trustee and to appoint a new one in his place under section 41 Trustee Act 1925 (where it is found inexpedient, difficult or impracticable to do so without the assistance of the court) and/or under the inherent jurisdiction of the court.
136. It is common ground that, in the case of removal of a trustee, the court should act on the principles laid down by Lord Blackburn in Letterstedt v Broers (1884) 9 App Cas 371 which has been cited in a number of recent cases including the decision of Lewison J (as he then was) in The Thomas and Agnes Carvel Foundation v Carvel [2007] EWHC 1314 (Ch). Lewison J summarised those principles in paragraphs 44 – 47 of his judgment thus:

44. At page 386 Lord Blackburn referred with evident approval to a passage in Story's Equity Jurisprudence:

"…… But in cases of positive misconduct, Courts of Equity have no difficulty in interposing to remove trustees who have abused their trust; it is not indeed every mistake or neglect of duty, or inaccuracy of conduct of trustees, which will induce Courts of Equity to adopt such a course. But the acts or omissions must be such as to endanger the trust property or to shew a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity."

45. He continued:

"It seems to their Lordships that the jurisdiction which a Court of Equity has no difficulty in exercising under the circumstances indicated by Story is merely ancillary to its principal duty, to see that the trusts are properly executed. This duty is constantly being performed by the substitution of new trustees in the place of original trustees for a variety of reasons in non-contentious cases. And therefore, though it should appear that the charges of misconduct were either not made out, or were greatly exaggerated, so that the trustee was justified in resisting them, and the Court might consider that in awarding costs, yet if satisfied that the continuance of the trustee would prevent the trusts being properly executed, the trustee might be removed. It must always be borne in mind that trustees exist for the benefit of those to whom the creator of the trust has given the trust estate."

46. The overriding consideration is, therefore, whether the trusts are being properly executed; or, as he put it in a later passage, the main guide must be "the welfare of the beneficiaries". He referred to cases in which there was a conflict between trustee and beneficiary and continued:

"As soon as all questions of character are as far settled as the nature of the case admits, if it appears clear that the continuance of the trustee would be detrimental to the execution of the trusts, even if for no other reason than that human infirmity would prevent those beneficially interested, or those who act for them, from working in harmony with the trustee, and if there is no reason to the contrary from the intentions of the framer of the trust to give this trustee a benefit or otherwise, the trustee is always advised by his own counsel to resign, and does so. If, without any reasonable ground, he refused to do so, it seems to their Lordships that the Court might think it proper to remove him; but cases involving the necessity of deciding this, if they ever arise, do so without getting reported."

47. He added, however, at page 389:

"It is quite true that friction or hostility between trustees and the immediate possessor of the trust estate is not of itself a reason for the removal of the trustees. But where the hostility is grounded on the mode in which the trust has been administered, where it has been caused wholly or partially by substantial overcharges against the trust estate, it is certainly not to be disregarded."

137. The basis for Lewison J's decision to remove Pamela Carvel as a trustee/personal representative can be seen from paragraphs 53 and 54 of the judgment:

53. It is plain that there is intense hostility between Pamela and the Foundation. Pamela is partisan as between the Foundation on the one hand and Carvel-Florida on the other. So far as the Foundation is concerned, the hostility is, in my judgment, grounded on the way in which the trusts have been administered.

54. Lord Blackburn cited as the guiding principle to the jurisdiction to remove trustees as being "the welfare of the beneficiaries". Mr Barlow submitted:

"Pamela has wholly disregarded this principle. Her every act has been calculated to promote her own personal interests and to prejudice those of the Foundation. She is in a position of irreconcilable conflict with the principal beneficiary of Agnes' estate and her hostility to the Foundation renders it quite impossible for her to fulfil her fiduciary duties. Her position as personal representative is untenable. She should be removed."

54. I agree…

138. In Kershaw v Micklethwaite [2010] EWHC 506 (Ch) the testatrix, who had three relevant children appointed two of her children and an independent accountant as executors. The third child who was entitled to two-fifths of the residuary estate sought the removal of some or all of the executors. He made a number of complaints about the administration of the estate which were held to be unjustified. Newey J dismissed the application. After citing substantially the same passages from Letterstedt and Carvel that I have cited he made a number of observations which seem to me to be relevant to the present case:

1. In paragraph 10 Newey J considered the relevance of the tasks to be carried out by the trustee. After citing a further passage from the judgment of Lord Blackburn he said:

I infer from that that Lord Blackburn would have regarded the fact that a trustee's functions were "of a simple character" as weighing against his removal.

2. In paragraph 11 he elaborated on the relevance of friction between an executor and a beneficiary:

I do not think that friction or hostility between an executor and a beneficiary will, of itself, be a good reason for removing the executor. On the other hand, a breakdown in relations between an executor and a beneficiary will be a factor to be taken into account, in the exercise of the court's discretion, if it is obstructing the administration of the estate, or even sometimes if it is capable of doing so. Mr Child himself accepted in the course of argument that for a breakdown in relations to warrant an executor's removal, the breakdown must at least have the potential to cause difficulty in the administration of the estate.

3. In paragraph 14 (after further citation from Lord Blackburn) he elaborated on the relevance of the testator's choice of executors:

I agree with Mr Barlow that a testator's choice of executors is capable of being of relevance, if on no other basis then because the testator may be expected to have had knowledge of the characters, attitudes and relationships involved which a court will lack.

4. In paragraph 22 he made the point that it is not every breach of trust that will justify the removal of an executor:

Even if things could have been handled better in certain particular respects, there is, in my judgment, no scope for any substantial criticism. In any case, as Lord Blackburn said in Letterstedt at pages 385 to 386, "… it is not indeed every mistake or neglect of duty, or inaccuracy of conduct of trustees", which will induce Courts of Equity to remove a trustee (or, I would add, an executor).

5.2 Removal of Martin

139. There is no doubt, in my mind, that there is hostility and friction between Martin and Andrew. It is well demonstrated by the matters referred to in section 3 of this judgment.
140. I have, however, dealt in detail with the complaints that Andrew has levelled at Martin. With the exception of the complaints about the stables and the Evans Rennie Invoice all of the complaints are very stale and were not pursued at the time. In respect of a number of the complaints I have castigated the complaints as being unreasonable. Even if I am wrong and there were breaches of trust in not altering the 2002 accounts in accordance with the suggestion made by Mr Root there would in my view be no scope for any substantial criticism of Martin. Equally there is, in my judgment, no scope for any substantial criticism over the Evans Rennie Invoice. The highest the matter can be put is that the client care letter was not copied to Berwins when neither Berwins nor Andrew had shown any interest in obtaining a quotation for the survey. For the reasons set out above Andrew has no valid complaint about the construction of the stables which in any event were constructed on Martin's own land.
141. The conduct of Andrew throughout these proceedings has satisfied me that there is force in Martin's comment that Andrew will pick up on anything -- anything at all --which he believes will give him some advantage in terms of this dispute, and run with it.
142. It is clear from the authorities cited above that hostility between Andrew and Martin is not of itself sufficient to justify the removal of Martin. It is, however, a factor if it is hindering the administration of the trust or may do so.
143. The following factors seem to me be relevant. First Martin was selected by the settlor - Elizabeth Scott – to be a trustee and has been a trustee since 1996. Despite Andrew's views no substantial legitimate criticism can be levelled at his conduct as a trustee since then. The trustees' functions are simple at the moment. The trust property comprises 17 acres of agricultural land and relatively little administration is required. It is possible that they will become more complex if, for example, the hope value of the land materialises. Martin is, however, the partner in a commercial firm of solicitors in charge of the Construction and Engineering Department and there is every reason to think that he would be able to deal with any complexities involved. I am not satisfied that Andrew's hostility to Martin will prevent Martin from administering the trust properly.
144. It follows that I do not accept the submission in paragraph 13 of Mr Selwyn Sharpe's closing submissions that the breakdown between them has directly impeded the running of the trust and will do so in the future. In all the circumstances I decline to order the removal of Martin.

5.3 Removal of Andrew

145. I take a different view as regards Andrew. In my view Andrew's hostility to Martin has had and is continuing to have a deleterious effect on the administration of the trust. The most obvious example is in the refusal to finalise the accounts based on the wholly irrational and unreasonable grounds that there is a partnership between Andrew, Martin and Simon despite clear advice that no such partnership exists. However the matter does not end there. Andrew's attitude throughout the proceedings including the allegations that he has made which have proved unfounded have convinced me that Andrew's hostility is affecting the welfare of the beneficiaries. In those circumstances I have decided to remove Andrew as a trustee.
146. I am invited to substitute Simon for Andrew. I am content to appoint Simon if, having read this judgment he still is willing to be a trustee. I am however conscious that both Simon and Martin are principal beneficiaries under the trust and there would be an obvious potential conflict of interest between their interests and Andrew's.
147. As I indicated during the course of the closing oral submission it is my provisional view that there ought in addition to be an independent professional trustee who will be in a position to ensure that decisions that are taken are in the interests of the beneficiaries as a whole. I am conscious that the appointment of such a trustee will add to the expense of administering the trust but it may have the effect of reducing the potential for future litigation over the conduct of the trust. At the resumed hearing I would welcome further submissions on this point when the parties have had the opportunity of considering it further. I would also be interested in the views of Simon.